The Chancellor certainly made his mark when delivering a “mini budget” which had more announcements than most full-blown budgets we can remember!
The headlines that have the biggest and most immediate impact are:
A planned rise to 25% has been scrapped. Originally a rise of 6% from the current rate of 19% was set to take place from April 2023, the good news is it now won’t take place, and corporation tax rates will remain at 19%.
Increased in April 2022 by 1.25% for employee’s and 1.25% for employers. This has been reversed with effect from 6th November. A win for employee’s who in effect get a 1.25% pay rise and also for employers who see their employer’s national insurance bill reduce by 1.25% which will help with the pressure currently being felt on salaries experienced by employers.
Was due to increase from 7.5% to 8.75% for the lower rate and from 32.5% to 33.75% for the higher rate in April 2022 in line with national insurance rises. This has also been scrapped. Additionally, the higher rate of dividend tax for those earning over £150,000 which was set at 39.35% has been removed altogether. There is now just one higher rate for income earned of £50,270 of 32.5%.
Is to be cut from 20% to 19% from April 2023, this is now the lowest rate of income tax in the modern tax system.
The top rate of income tax of 45% for those with income totalling over £150,000 has been abolished. Meaning there is one higher rate of tax of 40% for anyone with income over £50,270 a year.
With announcements also made on reducing stamp duty rates and removing IR35 reforms of recent years the new chancellor has a clear low tax, low regulation approach.
For further explanation in more detail of how any changes in the recent budget will affect you and your business please get in touch with any of the team at Spark.